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Paxos Labs Launches Privacy-Preserving USAD Stablecoin on Aleo Network

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TLDR:

  • USAD offers privacy-preserving transactions while maintaining regulatory oversight capabilities
  • Paxos leverages its established infrastructure to issue compliant stablecoins on Aleo’s platform
  • Circle previously partnered with Aleo for USDCx, showing competitive interest in privacy solutions
  • Aleo raised $200 million at $1.45 billion valuation from SoftBank, a16z, and Coinbase Ventures

 

Privacy-preserving USAD stablecoin has launched on the Aleo Layer 1 mainnet through a partnership between Paxos Labs and Aleo Network.

The collaboration introduces digital dollars to a zero-knowledge powered environment. The stablecoin offers privacy and programmability features for enterprise users.

Aleo previously partnered with rival issuer Circle to pilot USDCx. The launch reflects growing institutional demand for privacy-focused blockchain solutions.

Partnership Details and Technical Framework

Paxos Labs will issue USAD using its established infrastructure to meet regulatory oversight requirements. The stablecoin operates on Aleo’s zero-knowledge cryptography platform.

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The technology provides end-to-end encryption by default. The platform conceals participant identities, wallet addresses, and transaction amounts from public view.

Aleo COO Leena Im explained the stablecoin design incorporates Paxos’ issuance infrastructure. The system meets “oversight requirements while still protecting sensitive user information,” Im noted.

The balance between privacy and oversight represents a core technical achievement. Selective disclosure capabilities allow for regulatory compliance without compromising user confidentiality.

USAD supports traditional payment functions as well as advanced programmable applications. The stablecoin enables use cases difficult to execute on transparent blockchains.

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Target applications include discreet payroll processing, business-to-business payments, and anonymous decentralized finance activities. Furthermore, enterprises can embed trusted digital currency into their platforms.

Paxos Labs co-founder Bhau Kotecha emphasized the strategic value of the collaboration. “Working with Aleo, we are bringing digital dollars into an environment where privacy and programmability are built in from the start,” Kotecha said.

He added that enterprises gain “a way to embed money they can trust.” The executive expects more organizations to deploy custom assets on blockchain platforms.

Kotecha noted that stablecoins continue to impact traditional financial rails. He stated Aleo and its team are “already ahead of the curve” on this development.

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The trend toward programmable money reshapes financial infrastructure. Organizations increasingly value privacy-preserving transaction capabilities for commercial operations.

Market Context and Company Background

The launch occurs amid rising interest in institutional-grade privacy solutions for blockchain assets. Businesses want blockchain benefits without exposing sensitive commercial details on transparent networks.

Circle previously selected Aleo to develop USDCx, a privacy-focused version of its flagship token. The competitive landscape shows multiple issuers exploring privacy-preserving stablecoin technology.

Paxos has established experience in the stablecoin sector through partnerships with major platforms. The company previously issued stablecoins for PayPal and Binance.

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Moreover, Paxos plays a role in the Global Dollar consortium. The USDG initiative includes Anchorage Digital, Bullish, Kraken, OKX, Robinhood, and World.

Aleo Network launched its mainnet in September 2024 after several years of development. The Layer 1 project raised $200 million in a 2022 Series B funding round.

The company achieved a valuation of $1.45 billion during the financing. SoftBank’s Vision Fund 2 and Kora Management co-led the investment.

The project has attracted backing from prominent investors across the blockchain ecosystem. Notable supporters include a16z, Softbank, Coinbase Ventures, Samsung Next, and Tiger Global.

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The investor roster demonstrates confidence in zero-knowledge technology applications. Aleo’s platform aims to enable privacy-focused blockchain solutions for enterprise adoption.

 

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Crypto World

Franklin Templeton Expands Crypto Arm With CoinFund Deal

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Franklin Templeton Expands Crypto Arm With CoinFund Deal

Global asset manager Franklin Templeton is set to expand its crypto footprint by acquiring a spinoff of the crypto-native investment firm CoinFund.

Franklin Templeton said Wednesday it plans to acquire 250 Digital, a CoinFund spinoff that runs liquid crypto investment strategies, expanding the asset manager’s digital asset business. The deal will form part of a new unit called Franklin Crypto once it closes.

The move follows CoinFund’s decision earlier this year to spin out its liquid strategies business into 250 Digital as the company sharpened its focus on venture investing.

Christopher Perkins will lead the new Franklin Crypto, and Seth Ginns will serve as chief investment officer alongside Franklin Templeton digital assets veteran Tony Pecore, as the company broadens its crypto investment platform for institutional clients.

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The deal will incorporate BENJI tokens, which represent ownership shares in the Franklin OnChain US Government Money Fund (FOBXX), a regulated money market fund tokenized by Franklin Templeton in 2021.

Acquisition involves all liquid strategies previously run by CoinFund

Franklin said the undisclosed transaction includes the 250 Digital investment team and all liquid cryptocurrency strategies previously run by CoinFund, and that it will also invest in those strategies as part of the agreement.

The transaction is expected to close in the second quarter of 2026, subject to the execution of definitive transaction agreements, client consents and other customary closing conditions.

Source: Franklin Templeton Digital Assets

Franklin Templeton’s digital asset arm manages around $1.8 billion in assets and is a major institutional player in the crypto industry, where it has been building a presence since 2018.

The company is known for being one of the first to launch a US-listed spot Bitcoin ETF alongside other major asset managers such as BlackRock in 2024.

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Related: Franklin Templeton, Ondo to launch tokenized ETFs with 24/7 trading via crypto wallets

The acquisition comes during a prolonged slump in the crypto market, with Bitcoin down around 45% from its peak above $126,000 recorded in October 2025.

However, Franklin Templeton says the environment is attracting talent and creating opportunities to build long-term infrastructure.

Franklin’s head of innovation, Sandy Kaul, told The Wall Street Journal the recent market selloff helped create an opening to expand.

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“This big selloff that we had in the crypto markets is creating a very unique opportunity that really made us all decide that this is the right time to pull the trigger,” Kaul said.

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